Bernie Madoff Fraud Case
Bernie Madoff Fraud Case
Bernie Madoff Fraud Case
Introduction
One of the largest fraud cases of all times is that of the “Bernard Madoff Case.” According to Armstrong (2008), “for a number of years Madoff managed to lure billions of dollars away from huge charities, as well as wealthy individuals in both the United States and Europe by getting them to invest in his hedge fund. This he did by offering extraordinary returns to investors, until his scheme eventually reached a staggering $50 billion under “management.”
Within this paper, efforts will be made answer a number of questions, including how was this fraud executed; who were the perpetrators, accomplices and victims; how was the fraud discovered; what were some of the possible red flags; and what role did the SEC play in discovering the fraud. In addition to this, mention will be made of how the case was resolved and what are some of the measures that could have deterred or prevented the fraud from occurring in the first place. Given these harsh economic times which we live in, all efforts have to be made to enforce strict rules and regulations within financial institutions – so that investors and other stakeholders’ interests are protected. Had there been closer attention given by the Securities Exchange Commission and other regulators to the ‘red Flags’ associated with Madoff and his firm, then so many persons would not have lost billions.
Bernard Madoff Investment Securities (BMIS) Founded in 1960 by Bernard L. Madoff, Bernard Madoff Investment Securities (BMIS) was described as a broker-dealer firm that engaged in three principal types of business – market making; proprietary trading; and investment advisory services. BMIS had its principal place of business in the United States, but it also had its subsidiary – Madoff Securities International Limited (MSIL) which was incorporated in the United Kingdom. Gregoriou & Lhabitant (2009) stated in their paper that, “initially, BMIS
Bernie Madoff Fraud Case
Introduction
One of the largest fraud cases of all times is that of the “Bernard Madoff Case.” According to Armstrong (2008), “for a number of years Madoff managed to lure billions of dollars away from huge charities, as well as wealthy individuals in both the United States and Europe by getting them to invest in his hedge fund. This he did by offering extraordinary returns to investors, until his scheme eventually reached a staggering $50 billion under “management.”
Within this paper, efforts will be made answer a number of questions, including how was this fraud executed; who were the perpetrators, accomplices and victims; how was the fraud discovered; what were some of the possible red flags; and what role did the SEC play in discovering the fraud. In addition to this, mention will be made of how the case was resolved and what are some of the measures that could have deterred or prevented the fraud from occurring in the first place. Given these harsh economic times which we live in, all efforts have to be made to enforce strict rules and regulations within financial institutions – so that investors and other stakeholders’ interests are protected. Had there been closer attention given by the Securities Exchange Commission and other regulators to the ‘red Flags’ associated with Madoff and his firm, then so many persons would not have lost billions.
Bernard Madoff Investment Securities (BMIS) Founded in 1960 by Bernard L. Madoff, Bernard Madoff Investment Securities (BMIS) was described as a broker-dealer firm that engaged in three principal types of business – market making; proprietary trading; and investment advisory services. BMIS had its principal place of business in the United States, but it also had its subsidiary – Madoff Securities International Limited (MSIL) which was incorporated in the United Kingdom. Gregoriou & Lhabitant (2009) stated in their paper that, “initially, BMIS
References: Armstrong, B. (2008). Madoff and the failure of the SEC. Retrieved from http://mises.org/daily/3260 Bernstein, J Carozza, Dick. (2009). Chasing Madoff: An Interview with Harry Markopolos. Retrieved from http://www.acfe.com/madoff-case/Chasing-Madoff.pdf Dipaolo, C Gasparino, C. (2008). The Red Flags in the Madoff’s Fund’s Past. Retrieved from http://www.cnbc.com/id/28195326/The_Red_Flags_In_the_Madoff_Fund_s_Past Gregoriou, G Lamont, G. 2011. (2011). Looking beyond a decade of fraud, corruption and turmoil. 2010 Securities Litigation Study. Retrieved from http://10b5.pwc.com/PDF/NY-11-0484%20SEC%20LIT%20STUDY_V6BONLINE.PDF Millstone, K Piper, D. (2010). Fraud: forgotten but not gone. Retrieved from http://www.inhouselawyer.co.uk/index.php/fraud-and-corporate-crime/8264-fraud-forgotten-but-not-gone Southern District Court of New York Spanier, A. (2011). Ascot, Gabriel and Ariel Funds. Retrieved from http://www.abbeyspanier.com/cases-overview/254-ascot-gabriel-and-ariel-funds Sunderland, R